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Need help to see if I got the correct answer. Lock Co makes a single product - a lock and uses marginal costing. The standard
Need help to see if I got the correct answer.
Lock Co makes a single product - a lock and uses marginal costing. The standard cost card for one unit is as follows: Standard cost card Selling price 80 Direct materials (4 kg at $3 per kg) Direct labour (2 hours at $10 per hour) Variable overhead (2 hours at $2 per hour) 12 20 Marginal cost 36 A junior member of the accounts team produced the following variance statement for the month of May Variances Budget (1,000 units) $ 80,000 Actual (960 units) $ 76,800 Sales $ 3,200 Ady Less: Marginal cost Direct materials Direct labour Variable overheads Contribution (12,000) (20,000) (4,000) 44,000 (11,126) (18,240) (3.283) 44.151 874 Fav 1,760 Fav 717 Fav 151 Fav Lock Co used 3,648 kg of materials in the period and the labour force worked - and was paid for - 1.824 hours. Required: Prepare a statement which reconciles budgeted contribution to actual contribution in as much detail as possible. Do not calculate the sales price and the labour rate variances, since both of these have a value of nil. Clearly show all other workings. (15 marks)Step by Step Solution
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